Singapore’s business-friendly reputation has attracted the likes of many multinational companies and has drawn in foreign investments across a range of industries. As of 2019, the country has more than 4200 regional headquarters based here, the highest in the Asia Pacific. Some examples include TikTok and Dyson, who have announced plans to establish their headquarters in Singapore despite dismal economic conditions.
In this article, we explore how a combination of unique factors have enhanced Singapore’s status as the preferred business hub.
Stable Political and Economic Climate
Since her independence in 1965, Singapore has established itself as one of the most politically stable and corruption-free countries. The country leaders lead by example and the judicial system has been recognised as one of the most efficient in Asia. Strict law enforcement, hefty penalties, and high standards for moral rectitude have attributed to the country’s low crime rates. Its full suite of international dispute resolution institutions has also lent it further weight as a dispute resolution hub. Newcomers looking to establish their business here can be assured of the country’s sound political infrastructure, where transparency of policy-making procedures is highly valued.
Singapore’s small and open economy is robust and resilient against global or regional economic headwinds. It is worth noting that Singapore does not carry foreign debt and has built strong reserves. The low-risk and stable economy will provide strong confidence for potential entrepreneurs and investors, a crucial determinant when evaluating a country’s suitability for business endeavours.
Pro-business Policies and Government Support
Pro-business policies and strong government support should be fundamental considerations in the search for potential business locations. Initiatives and assistance schemes can significantly mitigate the challenges faced by businesses. In some cases, the availability of resources may determine the success and sustainability of the business.
To propel the nation towards a thriving start-up ecosystem, Singapore provides start-ups with grants and in-kind assistance. Non-start-up firms can benefit from assistance schemes from various government agencies and statutory boards. Multinational companies wishing to relocate their headquarters to Singapore may also enjoy regional headquarters (RHQ) or international headquarters (IHQ) incentives.
Singapore’s commitment to strengthen its position as a launchpad for entrepreneurs is reflective in its adoption of a pro-growth approach and continual efforts in building a conducive environment for businesses. By broadening the resources available and revising statutory regulations, Singapore ranks top 3 on the list of countries for ease of doing business and for starting a business.
Attractive Tax Framework and Extensive Trade Agreements
A comprehensive tax framework and network of trade agreements is the third factor that makes Singapore particularly attractive to entrepreneurs and corporations.
Corporate tax rates are at 17% and progressive personal tax rates range from 0-22%. To help local enterprises grow, new companies receive significant tax breaks and can subsequently claim tax exemption, tax benefits or tax reliefs. Individuals may likewise tap on qualifying reliefs, deductions, or rebates.
An extensive network of Free Trade Agreements (FTAs), Avoidance of Double Taxation Agreements (DTAs), Limited Treaties, and Exchange of Information (EOI) Arrangements allow companies to enjoy tariff concessions and avoid double taxation on cross-border transactions. For Singapore tax residents that receive foreign-sourced income from jurisdictions that do not have DTAs with Singapore, a Unilateral Tax Credit (UTC) will be granted. Singapore-based holding companies or headquarters can also repatriate dividends from their directly held foreign subsidiaries to Singapore, free of local tax.
Minimised tax barriers to the flow of trade and investment have boosted Singapore’s appeal as a trade hub. Combine this with its comprehensive tax incentives and vast network of trade agreements, it is no wonder that Singapore prevails as a tax haven for businesses.
Vibrant Financial Centre and Well-developed Capital Market
Several financial sectors or markets represent Singapore’s key regional and global role as a major banking hub. According to the Monetary Authority of Singapore (MAS), these include wealth and asset management, foreign exchange and derivatives, infrastructure finance, FinTech and innovation. These key strength areas are supported by an ecosystem of capabilities such as developers, services providers, multi-lateral development banks, commercial banks, financial institutions, and investors.
Due to low levels of risk, Singapore enjoys strong investor confidence and receives more foreign direct investment (FDI) than most of the world’s developed economies. Enterprise financing has grown with a diverse range of global and regional private equity (PE) and venture capital (VC) managers, amongst many others. In December 2020, the MAS also issued four digital bank licenses, to further strengthen Singapore’s financial sector.
A well-developed capital market is indicative of potential funding opportunities and financial resources for investors. This provides personal security and confidence that suggests long-term fiscal stability and economic prosperity.
Global Connectivity and Excellent Infrastructure
Changi Airport’s acclaimed status as the world’s best airport is substantiated by its unrivalled customer experience and coverage network. As of 2019, the airport serves over 123 airlines flying to 382 cities across 94 countries and territories and is home to leading logistic players.
Aside from being an air hub, Singapore’s also commands a strategic position in the regional and global arena as a maritime hub. Regarded to be one of the world’s busiest ports, the Port of Singapore is the focal point for some 200 shipping lines with links to more than 600 ports in over 120 countries.
Along with a well-connected transport network, reliable utility supply, sophisticated digital networks and state-of-the-art facilities, Singapore’s rapid advancement over the years can be attributed to its excellent infrastructure. These factors have played substantial roles in catalysing the country’s economic growth and ensuring its seamless connectivity, thereby facilitating business, trading and communication.
Skilled and Productive Workforce
Singapore’s focus on education has led it to achieve a world-class education system geared to the needs of the 21st century. The Ministry of Education’s vision “Thinking Schools, Learning Nation”, reinforces the country’s commitment to nurture students as thinking adults and inculcate a lifelong learning culture for its citizens.
Recognising the need for its citizens to remain relevant and competitive, the Singapore government invests heavily in training and motivating the local workforce. The Skillsfuture movement introduced in 2015, promotes continuous learning by providing valuable resources and opportunities for Singaporeans to learn new skills and develop their expertise.
Couple the above with the nation’s flexible labour laws and liberal immigration policy to welcome global talent, Singapore has arguably one of the most dynamic and productive talent pools. This will certainly be advantageous in driving strong, sustainable, and balanced growth for businesses.
Singapore’s success as a business hub is a result of its collective efforts over the past few decades. Undeterred, the country has plans to build deeper links with the world for markets, supplies, technology, and talent, to enable businesses to access regional and global opportunities.
To quote the Minister of Trade and Industry Mr Chan Chun Sing, the end goal for Singapore is “to be the critical node in global value chains, production chains, and supply chains, where (the country) add(s) value as a leverage point that enables regional and global business to grow exponentially and succeed.”.
As a local company, Advenz is proud to share the achievements of Singapore and its advantages as the preferred location for entrepreneurs and corporations to grow their businesses. Convinced to start a business in Singapore? Explore our full range of company incorporation services and get in touch with us today!